Correlation Between Evolution Gaming and Corsair Gaming

Can any of the company-specific risk be diversified away by investing in both Evolution Gaming and Corsair Gaming at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Evolution Gaming and Corsair Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evolution Gaming Group and Corsair Gaming, you can compare the effects of market volatilities on Evolution Gaming and Corsair Gaming and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Evolution Gaming with a short position of Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Gaming and Corsair Gaming.

Diversification Opportunities for Evolution Gaming and Corsair Gaming

-0.08

Correlation Coefficient

Evolution Gaming  Corsair Gaming

Good diversification

The 3 months correlation between Evolution and Corsair is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming and Evolution Gaming is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Evolution Gaming Group are associated (or correlated) with Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Corsair Gaming go up and down completely randomly.

Pair Corralation between Evolution Gaming and Corsair Gaming

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 0.76 times more return on investment than Corsair Gaming. However, Evolution Gaming Group is 1.32 times less risky than Corsair Gaming. It trades about -0.02 of its potential returns per unit of risk. Corsair Gaming is currently generating about -0.03 per unit of risk. If you would invest  10,572  in Evolution Gaming Group on October 9, 2024 and sell it today you would lose (2,479) from holding Evolution Gaming Group or give up 23.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evolution Gaming Group  vs.  Corsair Gaming

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Corsair Gaming

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and Corsair Gaming

The main advantage of trading using opposite Evolution Gaming and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming position performs unexpectedly, Corsair Gaming can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.

The idea behind Evolution Gaming Group and Corsair Gaming pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.